Nike bill in special session is only the first step toward economic improvement

Legislators and lobbyists who have pushed this week for expanding a proposed tax-certainty bill so that it helps more businesses need to keep their resolve when the Legislature convenes for its regular session next month.

It would give the governor authority to lock in existing tax policy for companies making investments that meet certain thresholds. As proposed, the bill applies to companies that commit to spend more than $150 million on new operations or expansions. Such businesses also must create at least 500 jobs.

It's debatable how many businesses would benefit from the bill in the long term. But the short-term intent is as clear as a sunny summer day: Make sure that Nike, which is outgrowing its Washington County headquarters campus, expands in Oregon instead of elsewhere. Specifically, Nike wants assurance the state won't abandon the "single sales factor" method of calculating taxes. Under that method, corporate taxes are based solely on sales in the state.

Much of the criticism of the bill has been about things that it doesn't do.

The bill doesn't offer tax breaks to big business, as those who scream "corporate welfare" claim. It simply gives the governor the ability to lock in the status quo. So strike that concern.

Others fret because the bill doesn't offer the same tax certainty to small businesses, most of which can't hope to meet the job-creation and investment thresholds. But locking in the current tax structure isn't necessarily a good thing for small businesses. The biggest obstacles for growth of small businesses -- especially the ones that pay taxes at personal rates -- can best be addressed through meaningful tax reform.

Our biggest fear about this bill is that Oregonians might view it as a significant step toward boosting the economy. If the Legislature is going to achieve that goal in the 2013 session, this bill can be no more than the first lap of the race. Oregon must continue to improve its business climate to create the well-paying jobs needed to increase incomes and reduce poverty.

For an example of the competition from other states, consider the case of

Jeld-Wen plans to create at least 142 jobs over the next two years and invest $2 million. In exchange, North Carolina is offering a job-development grant of up to $2.54 million, depending on the amount of new personal income tax collections created by the company's expansion in the state.

Nike, on the other hand, gets no money from Oregon for expanding. It simply gets assurance that the state won't change its tax rules. The length of that guaranty -- from five to 40 years in the draft bill -- is one of the details worth discussion in today's special session.

As to small business, the bill will help in indirect ways. What benefits Nike also benefits small businesses that provide services or supplies for the athletic apparel company or sell products to its employees.

that they wanted to make this bill more inclusive. But that's a complicated job best addressed in the regular session.

"I think there's this tendency to say it's either good for big business or small business," economist Joe Cortright, with the Portland consulting firm Impresa, said of economic policy. But, it's not that simple. In reality all big businesses aren't alike, nor are all small businesses.

Take the effect of the single sales factor, for example. Nike and Intel are big companies; so are General Motors and Ford. But Oregon's tax structure is more favorable to Nike and Intel because they have large operations here but make most of their sales elsewhere. The automakers, on the other hand, sell a lot of vehicles here but have a small physical presence.

Legislators should focus on Nike today. But when they return, they need to remember that tax certainty is good for all businesses.